Peak Oil Matters

The potential of more than 2.5 trillion barrels of synthetic crude oil from oil shale is nothing short of fantastic! (Nearly two-thirds of that amount is located principally in the Bakken Formation of North Dakota, Montana and Saskatchewan; and the larger Green River Formation of Colorado, Wyoming and Utah.) With annual worldwide oil consumption of approximately 30 billion barrels of oil, it would seem that oil shale’s astonishing numbers drive yet another nail in the coffin of Peak Oil theory.

A couple of trillion barrels of oil from shale formations will hold us in good stead for more than a few lifetimes! (In a report issued several years ago, the RAND Corporation estimated that the Green River Formation alone could provide a quarter of this country’s current oil needs for 400 years! Amazing! [1]) It’s every bit as awe-inspiring a number as are the potential tar sands resources in Alberta.

Of course, there are two sides to every story, and like the tar sands of Alberta, there’s an enormous gap between what may rest beneath the ground and what we’ll be able to extract, refine, and eventually use over the course of many, many decades. Like its unconventional oil companion to the north, oil shale is not likely to be the solution to our energy concerns in the next several decades. If it ever is, it may be too late in any event.

Geologists and the United States Geological Survey estimate there are approximately 4.3 billion barrels of technologically recoverable oil in the Bakken region. We may possess the capabilities of extracting that much oil, but the costs going in and the consequences of attempting to extract and produce oil from shale are different matters entirely, so what may be “technologically recoverable” is by no means the same as “economically feasible.” And let’s also take note that 4.3 billion barrels of oil is about 7 or 8 months’ worth of oil consumption here in America, and the best hope is that all of that would be extracted over the course of no more than twenty years. Not particularly impressive.

The other formations appear to hold not much more promise, although the more optimistic estimates suggest we might see as much as 130 billion barrels of oil from them … eventually. (One expert directly involved with Shell Oil’s production efforts suggested back in 2005 that by 2030 we might see 5 million barrels per day from the formations out West. [2] Five million bpd doesn’t mean all that much now; it will mean much less a couple of decades into the future.)

Oil shale is, as acclaimed energy expert Chris Nelder has stated: “the oil of the future … and it always will be.”

The truth is that after nearly fifty years of attempts to develop oil shale into a satisfactory oil substitute, only a few hundred million barrels of oil have been produced, if that. In other words, we’ve probably managed to supply about a week’s worth of worldwide oil demand as a result of all that effort and money over nearly half a century. Trillions of barrels of oil! stops sounding so impressive when reality intrudes.

A recent and significant increase in production (see a detailed explanation here: http://www.theoildrum.com/node/5928#more – The Bakken Shale – Has it Moved the Oil Needle? by Gail the Actuary, November 2, 2009) does not change the basic fact that no company has yet made the full-scale commercial production of oil shale economically feasible—with no guarantees that we’ll ever see that outcome. The research and testing of commercial capabilities are not adequate to the task after decades of effort, nor do we have in place the proper facilities that would be needed to handle production demands. They won’t pop out of the ground fully-formed any time soon.

Best estimates are that establishing those essential commercial components is at least another decade away. By then we’ll be well on our way to decreasing supply trying to match increasing demand. That’s bad math.

Part of the reason is that like tar sands, oil shale is not easily extracted. Oil shale is not oil. It’s kerogen, a solid, not-yet-fully matured version of the fossil fuel. More specifically, it’s the organic matter within the oil shale, and in order for the oil to flow free of the shale and be pumped to the surface, it must be heated to more than 700 degrees for a couple of years (while surrounded by a three-foot wall of ice)! This is the “in situ” procedure. The other primary means of obtaining kerogen (usually buried thousands of feet below ground, by the way) is the “retorting” procedure: mining the oil shale and then heating the kerogen above-ground.

Either option represents the investment of a LOT of energy. It’s also important to appreciate that oil derived from kerogen requires further refining before it can be used for transportation purposes … more effort and expense after extraction.

And I won’t touch on the significant amounts of water required to help extract oil shale (and in regions of this country where water is a limited resource to begin with) nor am I discussing in this post the environmental degradation and pollution that results from mining this resource. I also omit any discussion about the impact of such massive undertakings on the local communities involved. I can omit discussion here, but we cannot ignore those considerations.

These pesky little details seem to get overlooked by those who dispute Peak Oil’s imminent approach.

At what point do we decide that the tens and hundreds of billions of dollars we seemingly have at the ready to invest in oil-related energy exploration and production ought to be devoted to resources not quite so limiting? Like the oil from tar sands, oil from oil shale is not anywhere near as productive or efficient an energy source as conventional crude oil … not even close, actually.

We’re just postponing the inevitable, and it seems we should be seriously considering alternatives (not that they are a panacea, either, since we need a lot of oil to research, extract, produce, process, and transport almost every other form of energy). They will at the very least represent a much better long-term solution than oil, shale, and tar. How difficult do we want to make the transition away from oil-based energy?

We have some choices to consider….

Next: Shifting Gears

Sources:

[1] Oil Shale Development in the United States: Prospects and Policy Issues by James T. Bartis, Tom LaTourrette, Lloyd Dixon, D.J. Peterson, Gary Cecchine; Copyright 2005 RAND Corporation, Santa Monica, CA
[2] http://www.theoildrum.com/story/2005/11/12/0150/4833

There are estimates suggesting that the tar sands of Alberta, Canada may contain more than 1.5 trillion barrels of synthetic crude oil in an area roughly the size of New York State. Given that the citizens of this planet consume about 30 billion barrels of oil per year, it seems that Peak Oil is another fallacy consigned to the proverbial dust bins of history. At that annual consumption rate, 1.5 trillion barrels will last a good long while! It’s an awe-inspiring number to say the least….

Of course, what the deniers of Peak Oil neglect to mention (facts can be so annoying!) is that perhaps 10% of that total will ultimately be produced, and that will take many decades if not centuries. This estimated reserve nonetheless represents the second largest resource on the planet, exceeded only by Saudi Arabia. But it is, sad for the deniers, not the solution to our energy woes.

Canada is already the United States’ leading supplier of oil, and about half of that comes from the tar sands in Athabasca Valley. The tar sands (some prefer the more benign term “oil sands,” as if we’re discussing beach sand that one just scoops up with a shovel and then wrings the oil out) are actually a mix of ingredients including bitumen, which is a dense congregation of heavy hydrocarbons (think paving material). At room temps bitumen is so thick that it does not flow, and fifteen or twenty degrees cooler than that, it’s as hard as a hockey puck.

One does not require any technical expertise to realize that converting thousands of tons of hockey pucks each day to liquid oil is a wee bit energy-intensive. And when the facts about extraction are made known (forests are first leveled, then tons of earth are excavated, then the bitumen from those tons of earth are heated to several hundred degrees by a high-pressure steam process known as Steam Assisted Gravity Drainage to liquefy the tar sands—all produced via natural gas at levels which some suggest are enough to heat 3 million homes per day—resulting in carcinogen-laced waste water left in nearby “tailings ponds” which currently cover an area greater than 50 square miles!), it quickly becomes clear that we have some energy-related and environmental issues of considerable magnitude.

It’s been stated that every barrel of synthetic crude produced originated from more than two tons of tar sands dug up and separated by the above-referenced steam process, which itself requires two barrels of fresh water for every barrel of oil produced. Think about that for a moment … this is what we have to do to obtain oil?

Leaks from the tailings ponds and resultant contamination of ground water are of immense concern to the residents of the area, and the significantly greater incidents of cancers among residents have been sources of dispute for years. Thousands of birds and animals have reportedly died from exposure to these contaminant-laden ponds. One Canadian report suggests that for all the efforts to contain those ponds, several million gallons of the polluted water leaks out every day. Not a single one of the tailings ponds have been reclaimed in accordance with the licenses granted. Once the mining stops, what happens when the ponds are left completely untreated and unattended?

(And I’m not even discussing the greenhouse gas emissions caused by this incredibly energy-intensive process, which are estimated to be anywhere from 15% – 40% per barrel higher than conventional oil production. I’m also skipping any discussion of the huge investments in specialized oil refineries needed to process synthetic crude, and the pollution potentials arising from the pipeline networks for transporting that fuel from Alberta to the Great Lakes region of both Canada and the United States.)

The deniers, as they are so skilled at doing, tend to gloss over those pesky truths and instead issue their pronouncements about the trillions of barrels of oil at the ready. They also conveniently neglect to inform that the current rates of oil production from tar sands aren’t even enough to keep pace with annual depletion rates from conventional oil fields. Omitting those facts makes it seem as though we just have all of these billions or trillions of barrels of “extra” oil just waiting for someone to lay claim. The truth is far different.

After thirty years of investments to the tune of several hundred billion dollars and thirty years of production efforts, the Canadian tar sands are producing less than 1.5 million barrels of oil per day … that’s it! In fact, Canada’s energy forecast was recently trimmed, pushing out the estimated higher rates of production by several more years. This past November, the Canadian Energy Research Institute (CERI) released a study showing tar sands production increasing to 4.5 million b/d by 2030 and growing toward a peak of 5.3 million b/d in 2041. Actual production in 2008 was 1.3 million b/d. [1] It seems we have a ways to go….

Even the most optimistic boosters of the tar sands expect no more than 3 million barrels of synthetic crude oil per day in the next 15 – 20 years, and with worldwide consumption rates of approximately 85 million barrels per day, 3 million won’t make much of a dent. It will make even less of a difference once increased demand, depletion rates, and an inability to keep pace via new discoveries are all factored into the mix. Facts truly are annoying at times!

Worse for advocates of tar sands as the solution to end all solutions, the current recession and price volatility in the oil markets have adversely impacted Canadian investments as well. It’s been reported that projects which were expected to deliver more than a million and a half barrels of this synthetic crude per day were cancelled or placed on hold indefinitely [2]

Our industrial needs dictate that we get all the oil we can. But at some point, we need to ask: At what cost? Let’s hope we have the collective wisdom to ask it a day too soon rather than a day too late.

Next: An Intro’ To Oil Shale

Sources:

[1] http://www.energybulletin.net/node/50971 Canadian Oil Sands Misses Unrealistic Projection – Issues Another
Published Mon, 12/14/2009 by ASPO-USA
[2] http://www.newscientist.com/article/mg20427375.900-extreme-oil-scraping-the-bottom-of-earths-barrel.html?full=true Extreme oil: Scraping the bottom of Earth’s barrel 02 December 2009 by David Strahan